Trade Elasticities in the Middle East and Central Asia: What is the Role of Oil?

Andreas Billmeier () and Dalia S. Hakura

No 08/216, IMF Working Papers from International Monetary Fund

Abstract: The analysis in this paper suggests that import and export volume elasticities are markedly lower in oil-exporting Middle East and Central Asian countries than in non-oil countries in the region. A key implication of this finding is that a real appreciation of the exchange rate in oil-exporting countries would achieve little in terms of expenditure switching: an appreciation does not boost imports and non-oil exports constitute only a small share of GDP and total trade in these countries. Therefore, while a real appreciation lowers the current account surplus of oil-exporting countries through valuation effects, the contribution to lowering global imbalances may be more limited.

Keywords: Middle East and Central Asia; Trade policy; Imports; Exports; Oil exporting countries; Exchange rate appreciation; Current account surpluses; Economic integration; Real effective exchange rates; Economic models; Working Paper (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dev, nep-ene, nep-ifn and nep-int
Date: 2008-09-15
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